Forex News Release

Financial stocks are leading the way lower once again, as traders continue to express concerns about the outlook for the sector following recent turmoil. AIG (AIG) is seeing substantial weakness as the insurer continues to look for a cash infusion. While traders wait for the Federal Reserve's decision on interest rates later in the day, continued weakness in the financial sector is likely to keep the broader markets under pressure. AIG (AIG) will remain in the spotlight, as the insurer continues to look for a cash injection. Meanwhile, the New York branch of the U.S. central bank announced actions to help improve market liquidity on Tuesday, reacting to the financial turmoil that sent stocks tumbling the day before.

Markets were shocked on Monday when venerable Lehman Brothers declared bankruptcy, Merrill was taken over by Bank of America for $50 billion, and insurer AIG scrambled to secure a cash infusion. Stocks turned in a dismal performance, with the Dow ending the session with a more than 500-point decline. The demise of venerable Wall Street institution Lehman Brothers changed that landscape for financials, while resource stocks were pummeled as commodity prices plunged on concerns about global demand.

Also today, the Department of Labor will also release its consumer price index, which is a key indicator of inflation at the consumer level. After rising by 0.8 percent in July, economists expect the consumer price index to fall by 0.1 percent in August. Tuesday afternoon, the Fed is expected keep its benchmark rate steady at 2 percent. However, with stocks plunging, the labor market in distress, liquidity tight, and the housing market showing few signs of snapping back, some are looking to policymakers to slash short-term interest rates in an attempt to stimulate the economy.